Thompson  Plan 


FOR 


People’s  Ownership 
and  Operation 


OF 


Street  Railway  Systems 


at  a 


Ct  Fare 


•  • 


SUBMITTED  TO  THE 


CHICAGO  CITY  COUNCIL 


IN  SPECIAL  SESSION 
SEPTEMBER  9,  1919 


GF  ILira 

J:EJB  3  1 


By 


MAYOR  WM.  HALE  THOMPSON 


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38  8 

C43\\t 


WM.  HALE  THOMPSON 

MAYOR 

CITY  OPCHI€ASO 
©FFijQE  QF  THE  MAYOR 


August  23,  1919 

Eon.  James  T.  Igoe, 

City  Clerk, 

Dear  Sir: 

By  virtue  of  the  authority  conferred  upon  me, 

I,  William  Hale  Thompson,  Mayor  of  the  City  of  Chicago, 
do  hereby  call  a  special  meeting  of  the  City  Council 
of  the  City  of  Chicago,  to  be  held  on  Tuesday, .September 
9,  1919,  at  2:30  P.  M. ,  and  request  that  notice  of  such 
meeting  be  sent  to  the  members  at  least  ten  days  in  advance 
thereof. 

The  purpose  of  the  proposed  special  meeting  is  to 
receive,  consider  and  act  upon -a  message  from  me,  as  Mayor, 
concerning  the  local  traction  situation,  and  a  proposed 
solution  of  the  traction  problems  confronting  us  contained 
therein. 


MAYOR’S  OFFICE 

Chicago,  September  9,  1919. 

To  the  Honorable,  the  City  Council  of  the  City  of  Chicago. 

Gentlemen:  Pursuant  to  the  call  issued  by  me,  August 
23,  1919,  for  this  special  meeting,  and  in  accordance  with 
the  purpose  announced  therein,  I  submit  for  your  con¬ 
sideration  this  message. 

In  numerous  previous  messages  I  have  discussed  the 
local  transportation  situation  and  from  time  to  time  have 
made  various  suggestions  with  a  view  to  aiding  improve¬ 
ment  in  service  for  the  benefit  of  the  people  of  Chicago 
whose  business  and  pleasure  is  dependent  upon  the  effi¬ 
ciency  of  our  traction  lines. 

From  my  experience  with  this  matter  and  from  my 
observation  of  the  workings  of  traction  interests  I  am  of 
the  opinion  that  the  people  of  Chicago  will  never  have 
satisfactory  traction  service  while  the  principal  end  aimed 
at  in  that  service  is  private  gain.  So  long  as  high  finance, 
returns  on  watered  stock  and  excessive  profiteering  are 
the  impulses  which  sway  traction  management,  just  so 
long  will  the  car-riding  public  continue  the  victims  until 
conditions  finally  become  unendurable. 

Traction  Employes’  Wage  Controversy 

In  the  early  part  of  July  of  this  year,  employes  of 
the  Surface  and  Elevated  Lines  demanded  increases  in 
wages  and  different  working  conditions,  threatening  a 
strike  unless  such  demands  were  granted.  On  July  14th 
the  City  Council*  adopted  a  resolution  providing  for  the 
appointment  of  a  committee  consisting  of  four  Aldermen, 
a  representative  of  the  Surface  Lines,  a  representative  of 
the  Elevated  Lines,  a  representative  of  each  of  the  unions 
to  which  the  Surface  and  Elevated  Lines’  employes  be¬ 
longed  and  the  Mayor.  On  this  committee  I  appointed 
Alderman  Thomas  F.  Byrne,  Sheldon  W.  Govier,  Scott  M. 
Hogan  and  Edward  R.  Armitage,  President  Leonard  A. 
Busby  of  the  Surface  Lines,  President  Britton  I.  Budd  of 
the  Elevated  Lines,  President  William  Quinlan  of  the  Sur- 


4 


face  Lines  Employes’  Union  and  President  William  Mylan 
of  the  Elevated  Lines  Employes’  Union.  On  July  21st  I 
called  a  meeting  of  this  committee  to  discuss  the  possi¬ 
bility  of  averting  the  threatened  strike.  The  meeting  was 
held  with  all  representatives  present  and  what  took  place 
appears  in  detail  in  my  report  submitted  to  the  Council 
on  July  31st,  pages  1064  to  1070  of  your  printed  proceed¬ 
ings. 

<  .  ■  1  •  ' 

Utilities  Commission  Negotiates  for  Settlement  , 

Previous  to  this  meeting,  however,  the  representatives 
of  the  Surface  and  Elevated  Lines  and  of  the  Unions  had 
taken  up  the  settlement  of  the  pending  controversy  with 
the  State  Public  Utilities  Commission.  No  representatives 
of  the  City  government,  or  of  the  people,  or  of  the  public 
press  were  admitted  to  the  conferences  which  took  place 
between  the  members  of  the  State  Public  Utilities  Com¬ 
mission  and  the  representatives  of  the  Surface  and  Ele¬ 
vated  Lines  and  the  Unions,  nor  were  any  notified  or  in¬ 
vited,  consequently  no  authentic  information  is  available 
as  to  what  took  place.  Your  committee,  however,  tendered 
its  good  offices  to  avert  a  strike  and  offered  to  meet  at  any 
hour  its  services  were  needed,  but  no  member  asked  for 
another  meeting,  and  the  State  Public  Utilities  Commis- 
/  sion  was  understood  to  be  in  control  of  negotiations. 

The  Public  Utilities  Commission  claimed  authority  to 
intervene  by  virtue  of  a  sentence  in  Section  8  of  the  Pub¬ 
lic  Utilities  Act,  reading  as  follows: 

“The  Commission  shall  at  such  times  as  the  Gover¬ 
nor  shall  direct,  examine  any  particular  subject  con¬ 
nected  with  the  condition  and  management  of  public 
utilities  and  report  to  him  in  writing  its  opinion 
thereon  with  its  reasons  therefor.” 

I  am  informed  that  the  conferences  referred  to  were 
held  at  the  direction  of  the  Governor. 

i  • 

Utilities  Commission  Increases  Fares 

The  threatened  strike  took  place  and  lasted  from  July 
29th  until  August  2nd,  when  all  employes  returned  to  work 
under  a  reported  agreement  arrived  at  with  the  co-opera- 


5 


tion  and  approval  of  the  Public  Utilities  Commission.  In 
the  middle  of  the  forenoon  of  Saturday,  August  2nd,  the 
Surface  Lines  notified  the  City  that  at  10  a.  m.  on  Monday, 
August  4th,  they  would  apply  to  the  Public  Utilities  Com¬ 
mission  for  a  temporary  order  allowing  them  to  charge 
increased  rates  of  fare  pending  a  hearing  to  be  held  later 
on.  The  Public  Utilities  Commission  on  Monday,  August 
4th,  over  the  objections  and  protests  of  the  City  proceeded 
to  consider  the  application  of  the  Surface  Lines  for  a  tem¬ 
porary  increase  in  rates  of  carfare,  and  on  Wednesday, 
August  6th,  entered  an  order  allowing  the  companies  to 
charge  seven-cent  carfares  instead  of  five  cents,  as  pre¬ 
scribed  by  the  1907  contract  ordinances. 

Companies  Profit — People  Ignored 

In  my  opinion  this  speedy  proceeding  offered  no  op¬ 
portunity  for  a  hearing  sufficient  to  warrant  the  Commis¬ 
sion  in  entering  an  order  which  for  the  time  being,  at 
least,  enables  the  Traction  interests  to  take  from  the  pock¬ 
ets  of  the  people  of  Chicago  from  $30,000  to  $38,000  a  day 
and  place  it  in  their  treasury,  with  only  a  very  remote 
chance  of  its  ever  being  refunded  in  case  the  rates  they 
are  now  charging  are  ultimately  found  to  be  unreasonable 
and  unjust.  This  is  a  new  style  of  government,  one  step 
removed  from  the  people,  by  means  of  which  financial 
burdens  are  first  levied,  collected  and  spent  and  the  peo¬ 
ple’s  claims  for  justice  adjudicated  afterward.  This  kind 
of  a  deal  would  never  take  place  under  a  Commission  con¬ 
trolled  by  the  people  and  elected  by  a  constituency  com¬ 
prised  of  the  people  directly  interested. 

Outcome  of  Proceedings  Planned 

The  members  of  the  State  Public  Utilities  Commission 
and  the  representatives  of  the  Surface  Lines  denied,  dur¬ 
ing  the  brief  proceeding,  that  there  was  any  previous 
agreement  that  carfares  would  be  increased  if  wages  were 
raised,  nevertheless  Mr.  Busby,  the  President  of  the  Sur¬ 
face  Lines,  testified  that  he  had  plainly  informed  the  mem¬ 
bers  of  the  Commission  that  if  wages  were  increased,  rates 


6 


of  fare  must  be  increased  also,  and  the  Commission  in 
turn  promised  the  Surface  Lines  a  “speedy”  hearing  on 
their  “emergency”  application  for  an  increase  in  carfares 
if  they  would  consent  to  an  increase  in  wages.  It  seems 
obvious,  therefore,  that  while  there  may  have  existed  no 
agreement,  in  fact,  there  must  have  been  an  understand¬ 
ing  in  substance,  borne  out  by  the  evident  preparedness 
and  speed  with  whioh  the  Commission  concluded  that  car¬ 
fares  should  be  increased. 

Proceedings  Arbitrary — Mayor’s  Comment  Thereon 

I  doubt  whether  the  State  Public  Utilities  Commission 
is  authorized  by  law  to  do  what  it  has  done  under  the  cir¬ 
cumstances  or  in  the  manner  in  which  it  has  done  it.  Its 
proceedings  appeared  to  me  to  be  autocratic  and  dictator¬ 
ial  toward  the  public  interest  from  beginning  to  end,  but 
if  it  is  upheld  by  law  then  the  Public  Utility  law  itself  is 
vicious  and  tyrannical  and  should  be  repealed.  After  the 
order  of  the  Commission  had  been  entered  and  put  in  force 
I  issued  a  public  statement  bearing  upon  same  which  was 
published  in  the  newspapers  of  Sunday,  August  10th,  and 
my  reason  for  repeating  it  here  is  that  it  bears  directly 
upon  the  purpose  of  this  meeting  and  what  I  am  about  to 
present.  The  said  statement  was  as  follows: 


Decision  Unfair — No  Justice  from  Traction  Owners 

“The  decision'of  the  State  Public  Utilities  Commis¬ 
sion  of  Illinois,  as  it  appears  to  me,  is  neither  fair  nor 
just  to  the  people  of  Chicago.  The  imposition  of  in¬ 
creased  street  car  fares  upon  the  people  without  a 
full  and  complete  hearing  of  the  people’s  side  of  the 
case,  and  without  a  physical  valuation  of  the  com¬ 
panies’  properties  upon  which  to  compute  its  earn¬ 
ings  and  base  rates  of  fare  to  the  public,  is  unfair 
and  unjust. 

“The  decision  serves  as  a  standing  reminder  to  the 
people  of  Chicago  that  they  never  have  and  never  will 
receive  justice  or  equity  or  the  benefits  of  square¬ 
dealing  from  the  crew  of  conscienceless  plunderers 
now  owning  and  operating  our  local  transportation 
lines.  A  square  deal  for  the  people  is  farthest  from 
any  thoughts  controlling  their  profiteering  designs. 


7 


Their  action  in  securing  a  raise  of  fares  in  the  manner 
in  which  it  has  been  done  should  wipe  out  any  vestige 
that  might  remain  of  public  confidence  in  the  present 
traction  management.  They  obtained  the  valuable 
franchises  which  they  hold  in  the  streets  of  Chicago 
from  the  people  under  a  contract  to  maintain  a  five- 
cent  fare  with  universal  transfers  during  the  life  of 
these  franchises,  which  still  have  eight  years  to  run. 
In  the  hearing  just  completed  they  have  wilfully  ig¬ 
nored  the  rights  of  the  people  who  are  the  owners  of 
the  streets — the  most  valuable  asset  to  the  companies’ 
business.  This  fullv  convinces  me,  and  I  believe  con- 
vinces  the  people  of  Chicago,  that  the  present  trac¬ 
tion  management  is  entitled  to  no  future  considera¬ 
tion,  because  it  recognizes  responsibility  only  to  the 
companies  and  none  to  the  people. 


People  Voted  for  Five-cent  Fares 

“In  my  second  inaugural  message  submitted  to  the 
City  Council  on  April  28th  of  this  year,  I  called  atten¬ 
tion  to  the  fact  that  the  people  by  their  votes  in  the 
mayoralty  election  favored  the  maintenance  of  the 
five-cent  fare  with  universal  transfers  upon  our  local 
transportation  lines,  and  insisted  that  the  terms  of  the 
1907  contract-ordinances  be  complied  with  until  a  new 
traction  policy  is  approved  through  a  referendum 
vote.  Yet,  in  the  face  of  this  mandate,  a  long  contem¬ 
plated  and  adroitly  executed  plan  of  the  traction 
bosses  is  consummated  to  thwart  the  will  of  the 
people. 

“The  increase  in  car  fares  awarded  the  companies 
is  a  vicious  public  hold-up  by  the  brazen  and  un¬ 
scrupulous  crowd  representing  the  ownership  and 
operation  of  our  street  railway  systems,  who  have 
apparently  perfected  all  the  preliminary  arrange¬ 
ments  for  an  interminable  scheme  of  wholesale  and 
retail  plunder. 

“What  do  the  people  of  Chicago  think  when  they 
pay  their  added  fares  and  realize  that  they  are  con¬ 
tributing  to  dividends  on  over  seventy-five  millions 
of  dollars  in  watered  stock,  and  to  the  upkeep  of  trac¬ 
tion  officials,  drawing  salaries  of  from  forty  thousand 
dollars  to  sixty  thousand  dollars  a  year,  and  who  hold 
utter  disregard  for  the  public  welfare? 


8 


Fight  Will  Go  On — Hope  in  New  Policy 

“The  fight  for  the  five-cent  fare  will  go  on  by 
and  with  the  aid  of  the  people.  The  fight  for  bet¬ 
ter  service  will  go  on.  The  fight  for  honest  traction 
management  will  go  on.  The  City  government  will 
contest,  with  every  resource  at  its  command,  the  in¬ 
fliction  of  this  added  oppression  upon  an  already  over¬ 
burdened  constituency.  We  will  fight  the  traction 
magnates  now  clutching  at  the  public  throat  until 
their  greed  is  conquered  and  their  plans  of  extortion 
defeated,  and  until  government  irresponsive  to  the 
people  becomes  answerable  and  obedient  to  the  people. 

“There  is  hope  for  the  future.  The  ultimate  result 
of  the  present  decision  will  be  that  the  arrogant  and 
autocratic  traction  policy  with  which  Chicago  is  af¬ 
flicted  must  give  way  to  a  management  in  the  hands 
of  men  responsible  to  the  people,  who  can  be  directed 
by  the  people  and  who  will  be  concerned  in  the  peo¬ 
ple’s  interest. 

“I  shall  in  the  near  future  present  a  plan  whereby 
such  a  situation  can  be  brought  about  and  whereby 
either  the  ownership  or  operation  of  our  traction  lines, 
or  both,  may  be  in  accord  with  the  reasonable  desires 
of  the  public,  and  give  Chicago  a  transportation  sys¬ 
tem  which  will  be  a  model  for  the  world.” 

Traction  History 

Before  proceeding  to  discussion  of  the  plan  suggested,  a 
summary  of  traction  affairs  as  related  to  the  City  of  Chi¬ 
cago  may  be  of  interest  to  some  of  the  members  of  the 
Council  in  considering  an  adjustment  or  determination  of 
the  question. 

Prior  to  April  2,  1906,  the  Surface  Lines  claimed  99-year 
rights  in  the  streets  of  Chicago,  which  practically  put  them 
above  and  beyond  control  of  the  City  government;  but  the 
Supreme  Court  of  the  United  States  decided  that  such 
claims  were  without  foundation  except  in  some  minor  and 
unimportant  particulars.  Following  this  decision  the  Sur¬ 
face  Lines  were  compelled  to  enter  into  negotiations  with 
the  City  to  procure  the  right  to  continue  to  operate.  These 
negotiations  resulted  in  the  so-called  settlement  ordi¬ 
nances  passed  by  the  City  Council  February  4, 1907,  vetoed 
by  the  Mayor  and  passed  over  his  veto  February  11,  1907, 


9 


and  approved  by  the  people  on  a  referendum  vote  April 
2,  1907.  These  ordinances  were  accepted  by  the  companies 
and  grant  them  the  right  to  operate  their  system  of  street 
railways  in  the  streets  of  Chicago  for  twenty  years,  or 
until  February  1,  1927.  These  ordinances,  no  matter  how 
vicious  or  one-sided  they  may  be,  are  unquestionably 
solemn  contracts  between  the  people  of  the  City  of  Chi¬ 
cago  and  the  Surface  Lines,  and  are  comprehensive  in 
every  detail. 


Provisions  of  1907  Contract  Ordinances 

They  provide  for  maintenance  of  the  street  railways  in 
first-class  condition  and  for  furnishing  first-class  trans¬ 
portation  to  the  people.  They  specifically  provide  that 
carfares  for  adult  passengers  shall  be  five  cents  for  a  con¬ 
tinuous  trip  in  one  general  direction  within  the  present  or 
future  city  limits,  and  that  transfers  shall  be  given  at  all 
connecting  points.  And  in  the  Unification  ordinance 
passed  November  13,  1913,  and  accepted  by  the  companies 
the  permanence  of  the  five-cent  fare  is  re-insured.  And 
it  will  be  remembered  that  in  the  campaign  for  ratifica¬ 
tion  of  these  ordinances  by  the  people,  the  leading  induce¬ 
ment.  and  rallying  cry  to  secure  votes  was:  “One  City,  one 
fare,  five  cents  with  universal  transfers.” 

These  ordinances  also  contain  provisions  giving  the  City 
the  right  to  purchase  the  properties  of  the  systems  during 
the  terms  for  which  they  run,  upon  six  months’  notice, 
and  at  the  end  of  the  terms,  upon  specified  valuations. 
Under  these  ordinances  the  so-called  capital  account  has 
been  built  up,  which  now  amounts  to  more  than  $157,000,- 
000  and  is  the  price  which  the  City  would  have  to  pay  the 
companies  for  their  properties  in  case  it  desired  to  pur¬ 
chase.  On  this  capital  account,  or  cash  purchase  price 
to  the  City,  the  companies  draw  five  per  cent  annual  in¬ 
terest  and  deduct  same  from  gross  receipts  before  any 
division  of  net  receipts  is  made  between  the  Companies 
and  the  City. 


10 


Operation  of  “Capital  Account” 

According  to  the  Companies7  claims  this  $157,000,000 
represents  the  cost  of  their  properties,  but  it  includes  five 
per  cent  for  brokerage  and  ten  per  cent  for  contractor’s 
profit,  which  fifteen  per  cent  never  went  into  the  prop¬ 
erty  at  all  and  on  which  the  Companies  ha\4e  earned  five 
per  cent  or  more  during  the  last  twelve  years.  In  other 
words,  every  time  the  Companies  spent  $850  for  property 
or  equipment  or  additions  thereto  they  added  $100  for 
contractor’s  profit  and  $50  for  commission,  thereby  creat¬ 
ing  $1,000  worth  of  value  and  the  $1,000  so  created  was 
added  to  the  Companies’  selling  price  of  the  property, 
thereafter  bringing  them  an  annual  interest  return  of  five 
per  cent. 


Companies  Plead  for  Tax  Reductions 

This  capital  account  is  strictly  a  one-sided  affair,  be¬ 
cause  the  cost  of  all  construction  and  equipment  of  old 
street  railway  lines  and  new  is  added  to  it  from  time  to 
time  while  nothing  is  ever  deducted  on  account  of  prop-" 
erty  depreciated  or  worn  out  or  removed  from  service. 
In  1917,  Mr.  William  W.  Gurley  and  Col.  E.  R.  Bliss, 
lawyers,  representing  the  traction  interests,  appeared  be¬ 
fore  the  Cook  County  Board  of  Review  and  stated  that  of 
this  capital  account,  which  then  amounted  to  approxi¬ 
mately  $150,000,000,  $55,775,000  was  gone  and  there  was 
nothing  left  to  represent  it,  and  that  $11,000,000  had  been 
invested  in  pavements  and  $2,000,000  in  sewers  which  be¬ 
longed  to  the  City  of  Chicago  and  that  the  balance  was 
only  worth  one-half  on  account  of  depreciation.  How  do 
you  think  the  citizens  of  Chicago  in  case  of  a  desire  to 
purchase  the  traction  lines  would  relish  paying  $13,000,000 
for  streets  and  sewers  which  they  already  own,  and  $55,- 
775,000  for  property  which  it  is  admitted  by  the  owners 
went  to  the  scrap  heap  several  years  ago?  And  where 
is  the  benefit  to  the  public  in  the  privilege  exercised  by  the 
Surface  Lines  Companies  of  drawing  five  per  cent  annual 
interest  on  the  cost  of  pavements  and  sewers  which  belong 


11 


to  the  people  and  which  were  installed  only  in  considera¬ 
tion  of  the  people  awarding  the  Companies  the  most  valu¬ 
able  of  all  their  possessions,  the  use  of  the  public  streets? 

Utilities  Commission  Admits  Inflation 

In  the  latter  part  of  April  of  this  year,  at  the  hearing 
then  pending  before  the  State  Public  Utilities  Commission 
on  the  application  of  the  Surface  Lines  for  an  increase 
in  rates  of  fare,  where  I  appeared  as  a  witness  and  testi¬ 
fied,  I  called  to  the  attention  of  the  Commission  the  state¬ 
ment  of  the  representatives  of  the  traction  companies  be¬ 
fore  the  Board  of  Review  and  the  Commission  in  denying 
the  application  for  increased  carfares  at  that  time  found 
that  the  capital  account  of  the  Surface  Lines  embodied 
items  aggregating  at  least  $44,000,000,  which  represented 
no  property  at  all  and  could  not  be  considered  for  rate¬ 
making  purposes. 

Companies’  Receipts  for  Last  Twelve  Years 

The  Surface  Lines  Companies  have  received,  under  the 
ordinances,  for  the  twelve-year  period  ending  January  31, 
1919,  six  per  cent  each  year  of  the  gross  receipts  for  main¬ 
tenance  and  repairs  and  eight  per  cent  for  renewals  and 
depreciation.  Approximately  two-thirds  of  the  amount 
collected  for  renewals  and  depreciation  has  been  spent  for 
the  purposes  intended.  Consequently  the  Companies  now 
have  on  hand  a  cash  balance  in  this  fund  amounting  to 
$9,686,052,20  upon  which  they  are  drawing  interest.  They 
have  also  received  during  the  past  twelve  years  5%  each 
year  on  the  capital  account  as  hereinbefore  mentioned,  and 
this  includes  5%  upon  the  $44,000,000  which  the  Public 
Utilities  Commission  found  to  be  the  minimum  inflation, 
and  runs  concurrently  with  5%  upon  the  $55,775,000,  $11,- 
000,000,  $2,000,000,  and  other  items  which  the  representa¬ 
tives  of  the  Companies  before  the  Board  of  Review  stated 
meant  nothing  to  them  and  ought  not  to  be  taxed,  not 
even  the  interest  already  collected  by  them.  They  have 
also  received  forty-five  per  cent  of  the  net  divisible  re¬ 
ceipts  remaining  after  deducting  the  foregoing  items.  In 
all  they  have  received,  excluding  the  amounts  for  main- 


12 


tenance  and  repairs  and  renewals  and  depreciation,  and 
adding  the  allowance  for  contractor’s  profits  and  broker¬ 
age,  a  grand  total  of  $104,159,526.63  during  the  twelve 
years  ending  January  31,  1919. 


Returns  on  Investments  Profitable 

President  Leonard  A.  Busby  of  the  Surface  Lines,  be¬ 
fore  the  Public  Utilities  Commission  last  month,  testified 
that  for  the  twelve-year  period  above  mentioned  the  aver¬ 
age  return  to  them  on  the  capital  account,  or  purchase 
price,  had  been  6.273%.  Obviously  this  means  that  with 
the  water  squeezed  out  and  honest  financial  values  substi¬ 
tuted  for  fictitious  ones  the  companies  have  earned  extra¬ 
ordinary  large  returns  on  their  actual  investments.  In 
fact,  if  they  had  conducted  the  business  of  their  companies 
in  an  honest  manner,  under  straightforward  systems  of 
management  and  accounting,  they  could  have  paid  ade¬ 
quate  wages  to  their  employes  at  all  times,  maintained  the 
five-cent  fare  and  rendered  efficient  traction  service  to  the 
people. 


Companies’  Indebtedness  Questioned 

The  Companies  plead  that  they  should  be  permitted  to 
earn  enough  to  pay  the  interest  on  their  outstanding  in¬ 
debtedness,  which  exceeds  $140,000,000.  I  believe  that  a 
large  part  of  this  indebtedness  is  made  up  of  items  of  old 
indebtedness  carried  forward  from  1906  and  1907.  when 
a  re-organization  of  the  Companies  took  place  and  when 
the  old  creditors  and  stockholders  in  the  various  Com¬ 
panies  were  taken  care  of  in  devious  ways.  The  old  stock¬ 
holders  were  given  stock,  or  participating  shares,  at  the 
time  of  re-organization  on  which  the  Surface  Lines  have 
been  paying  dividends  during  the  twelve  years  just  closed. 
Obviously  these  stockholders,  or  holders  of  participating 
shares,  have  no  actual  equity  in  the  properties  now,  and 
have  not  had  for  many  years,  as  the  capital  of  the  Com¬ 
panies  is  grossly  inflated  and  they  are  mortgaged  for  mil¬ 
lions  of  dollars  more  than  they  are  really  worth.  The 
whole  financial  fabric  of  the  Surface  Lines,  with  their 


13 


capital  account  and  indebtedness,  is  a  conspiracy  against 
the  public  interest  and  the  people  who  ride  on  the  cars 
and  pay  the  fares  carry  the  entire  burden.  » 

Companies  Can  Break  Contracts — People  Cannot 

The  hearing  before  the  Public  Utilities  Commission  on 
the  application  of  the  Surface  Lines  as  to  what  permanent 
rates  they  may  charge  commenced  yesterday.  It  is  well 
understood  that  at  this  hearing  the  Companies  will  contend, 
in  short,  that  the  City  is  bound  by  the  contract  ordinances, 
but  the  Companies  are  not.  They  will  even  contend  that 
they  are  at  liberty  to  break  the  contract  ordinances  rela¬ 
tive  to  their  capital  account  and  have  their  properties  re¬ 
valued  on  the  basis  of  war-time  prices  for  labor  and  ma¬ 
terial,  so  that  they  can  pay  themselves  more  brokerage, 
greater  contractor’s  profits  and  larger  interest  returns. 
I  anticipate  that  the  Public  Utilities  Commission  may  sus¬ 
tain  them  in  all  their  contentions,  but  I  sincerely  hope  and 
believe  that  the  courts  will  not  confirm  any  such  high¬ 
handed  and  arbitrary  proceedings,  but,  unfortunately,  the 
Companies  will  in  the  meantime  be  pocketing  the  revenues 
from  increased  fares  and  there  may  be  no  immediate 
method  of  obtaining  relief  for  the  people  who  are  com¬ 
pelled  to  pay.  Whether  or  not  we  can  ever  recover  for 
the  people  the  excess  carfares  collected  is  a  legal  problem 
which  I  will  not  at  this  time  discuus  any  further  than  to 
say  that  I  have  in^ructed  the  Corporation  Counsel  to  ask 
the  courts  to  make  some  order  by  means  of  which  repara¬ 
tion  for  injustice  may  be  ultimately  secured. 

Change  in  Traction  Management  Imperative 

I  think  from  the  foregoing,  and  from  public  knowledge, 
that  something  must  be  done  to  change  conditions.  The 
City  cannot  deal  with  the  Surface  Lines  Companies  any 
longer,  as  at  present  constituted,  because  they  are  con¬ 
tract-breakers.  They  are  not  only  contract-breakers  with 
the  City  government,  but  with  the  people  who  were  in¬ 
veigled  into  voting  for,  and  approving  the  ordinances, 
which  provide  for  “One  City,  one  fare”  for  a  term  of 
twenty  years ;  and  that  fare  five  cents  with  universal  trans- 


14 


fer  privileges.  The  ordinances  solemnly  obligate  the  Com¬ 
panies  to  charge  only  five-cent  carfares,  yet  they  trample 
their  obligations  under  their  feet  when  it  serves  their 
greed  to  do  so.  They  repudiate  the  provisions  of  the  law 
which  protect  the  community’s  rights  and  seek  refuge  in 
the.  provisions  which  protect  their  own.  This  is  a  mani¬ 
festation  of  multi-millionaire  anarchy,  which  will  prove 
fatal  to  popular  government  unless  permanently  checked. 
The  streets  of  Chicago  belong  to  the  people  and  street  car 
transportation,  under  just  and  reasonable  conditions  of 
service,  is  the  right  of  the  people.  Therefore,  I  submit  to 
the  City  Council,  and  to  the  people  of  Chicago,  that  a  plan 

must  be  devised  which  will  result  in  the  street  car  svstem 

•/ 

of  Chicago  being  taken  out  of  the  hands  of  the  present 
management  and  vested  in  an  authority  directly  respon¬ 
sible  to  the  people  whereby  the  car-riding  public  may  have 
adequate  service  at  a  five-cent  fare,  and  that  the  employes 
who  operate  the  system  may  he  paid  wages  commensurate 
with  their  service. 

New  Governing  Agency — “Transportation  District  of 

Chicago’’ 

It  is  futile  for  the  people  to  expect  representative  gov¬ 
ernment  that  represents  them  only  through  a  so-called 
Public  Utility  Commission  appointed  by  a  power,  itself 
distant  from  the  people  immediately  concerned.  I  would 
suggest  that  a  new  local  government  be  formed,  to  be 
known  as  “The  Transportation  District  of  Chicago7'  or  by 
some  other  descriptive  title.  It  may  be  argued  that  we 
have  too  many  local  governing  agencies  now.  That  is 
true  and  consolidations  should  be  effected.  But  this  is 
one  agency  that  should  be  separate  and  distinct  from  all 
others,  bear  no  relation  to  political  conditions  which  sur¬ 
round  others,  and  be  so  organized  and  constituted  as  to  he 
directly  responsible  to  the  people  who  comprise  it. 

This  proposed  government  should  have  the  power  to 
levy  taxes  and  issue  bonds  in  order  to  raise  a  sufficient 
revenue  to  purchase  or  build  and  equip  street  railway 


15 


properties  sufficiently  extensive  to  serve  the  City  of  Chi¬ 
cago,  and  its  environs  in  the  most  modern  and  efficient 
manner. 

To  Be  Managed  by  Trustees  Elected  by  the  People 

“The  Transportation  District  of  Chicago”  should  include 
in  its  territorial  limits  the  metropolitan  district  of  Chicago 
whatever  length  or  breadth  of  territory  that  may  be  deter¬ 
mined  to  be.  The  governing  body  of  this  proposed  “Trans¬ 
portation  District”  should  be  a  hoard  of  five  trustees 
elected  by  the  people.  These  trustees  should  be  elected 
at  the  outset,  one  for  one  year,  one  for  two  years,  one  for 
three  years,  one  for  four  years,  and  one  for  five  years,  and 
thereafter  one  each  year  for  a  five-year  term.  The  elec¬ 
tion  each  year  for  trustees  to  take  place  at  the  time  of 
th  aldermanic  elections,  thereby  involving  no  extra  ex¬ 
pense.  By  this  system  the  people  would  exercise  close 
control  over  the  general  policies  of  the  district  and  could 
effect  changes  or  alterations  in  management  each  year  if  . 
they  desired.  Through  a  government  such  as  this,  the 
traction  situation  would  at  all  times  be  in  the  hands  of 
officials  directly  responsible  to  the  people  and  local  trans¬ 
portation  would  be  operated,  not  with  a  view  to  fianancial 
profits  and  returns  on  unearned  increment,  or  for  creating 
wealth  through  the  swindling  processes  of  maintaining 
artificial  values  on  worthless  or  non-existent  properties, 
but  for  the  single  purpose  of  giving  the  people  useful 
commodious  and  accommodating  transportation  at  a  five- 
cent  fare. 


Companies  Rights  Should  Be  Forfeited 

I  hope  there  is  a  reasonable  ground  to  believe  that  the 
City  may  soon  rescind  and  cancel  the  rights  of  the  present 
Surface  Lines  Companies  in  the  street  of  Chicago  under 
the  contract  ordinances  for  the  reason  and  upon  the 
ground  that  the  companies  have  refused  to  be  bound  by 
said  ordinances  and  have  renounced  their  contracts  with 
the  City  and  with  the  people,  and  for  other  good  and 
sufficient  reasons,  some  of  which  I  have  called  to  your 
attention. 


16 


The  contract  ordinances  are  very  plain  as  to  forfeiture 
of  rights  and  privileges  in  the  streets  through  failure  to 
comply  with  all  of  the  terms  and  conditions  of  the  ordi¬ 
nances  upon  the  part  of  the  Companies.  One  of  the  most 
important  terms  and  conditions  of  these  ordinances  is  the 
maintenance  of  the  five-cent  fare  throughout  the  period  of 
time  covered  by  the  ordinances. 

# 

Future  Financial  Arrangements 

It  should  be  borne  in  mind  that  under  the  contract  or¬ 
dinances  of  1907,  the  City  has  some  twenty-five  million 
dollars  in  the  traction  fund  and  other  monies  available 
when  the  rights  of  the  present  traction  companies  are 
ended,  to  start  the  building  of  subways  and  such  lines  of 
transportation  as  may  be  required  to  create  a  superior  sys¬ 
tem  under  direct  control  of  the  people  who  use  it.  Long¬ 
term  bonds  can  he  issued  to  procure  money  necessary  to 
acquire  existing  properties  or  build  a  new  system  and 
thereafter  the  properties  will  be  self-sustaining  and  the 
income  from  them  sufficient,  not  only  for  their  operation, 
but  to  pay  interest  on  bonds  and  provide  a  sinking  fund 
to  meet  the  principal  when  due.  Such  bonds  will  be  desir¬ 
able  security  and  there  will  be  no  difficulty  in  marketing 
them  at  a  comparatively  low  rate  of  interest. 

I  am  advised  that  there  is  no  constitutional  objection 
to  the  plan  herein  proposed.  Enabling  legislation  will  be 
necessary,  but  I  am  confident  that  the  Governor  and  the 
Legislature  will  give  the  City  such  aid  if  the  people  de¬ 
mand  it.  Governor  Lowden  in  the  platform  on  which  he 
was  elected,  and  in  his  campaign  speeches,  pledged  him¬ 
self  to  home  rule  for  Chicago.  In  his  first  message  to 
the  Legislature  in  1917,  he  declared  as  follows: 

Governor  Lowden’s  Position  and  Legislation 

“We  have  declared  for  the  control  by  Chicago  of 
its  own  local  public  utilities.  Just  how  this  control 
should  be  worked  out  is  a  problem  peculiarly  resting 
upon  the  people  of  Chicago.  The  great  metropolises 
of  the  world  become  in  a  large  measure  political  units. 
The  public  utilities  of  such  cities  relate  themselves  to 
the  business  of  the  people,  to  their  well  being  at  home, 


17 


to  their  recreation,  and,  in  fact,  are  closely  woven 
with  their  daily  life.  The  question,  therefore,  of  the 
control  of  the  public  utilities  of  Chicago  principally 
affects  the  people  of  Chicago,  and  they  should  have 
the  right  of  control  of  such  utilities.  The  form  that 
such  control  shall  take  will  not  answer  the  needs 
unless  it  shall  be  satisfactory  to  the  people  of 
Chicago.” 

In  view  of  the  record  of  the  Governor  on  local  public 
utility  control  and  his  attitude  toward  home  rule  for  Chi¬ 
cago,  and  in  the  light  of  the  foregoing  declaration,  all  that 
it  is  necessary  for  the  City  Council  to  do  is  to  pass  the 
ordinance  which  I  will  submit  and  Governor  Lowden  is 
in  honor  bound  to  call  a  special  session  of  the  Legislature 
to  enact  the  legislation  which  will  enabe  Chicago  to  con¬ 
trol  its  public  utiities  in  manner  and  form  satisfactory  to 
its  people. 

Change  in  Car  Routing  Desirable 

I  also  believe  that  a  practical  change  should  be  made 
in  the  routing  of  transportation  lines  through  the  City 
which  will  eliminate  curves  and  switching  in  the  down¬ 
town  district.  All  lines  should  run  through  congested  dis¬ 
tricts  in  the  interest  of  the  whole  people,  rather  than  for 
the  benefit  of  special  interests.  I  cannot  conceive  of  a 
competent  engineer  who,  if  unhampered  in  his  operations, 
would  lay  out  a  plan  for  the  operation  of  a  street  rail¬ 
way  system  in  a  city  like  Chicago  and  provide  for  a  ter¬ 
minal  or  switchyard  at  the  point  of  greatest  congestion. 

Commission  Needed  to  Plan  Steps 

Having  set  forth  my  general  suggestions  for  a  plan  of 
acquiring  and  operating  a  street  railway  system  by 
trustees  or  managers  elected  by  the  people  and  who  by 
the  terms  of  their  election  must  operate  the  system  solely 
in  the  interest  of  the  people,  I  request  that  you  authorize 
me  to  appoint  a  commission  to  work  out  the  problems  in¬ 
volved  in  detail,  draft  the  necessary  legislation,  and  take 
such  other  preliminary  steps  as  may  be  expedient  to  bring 
the  plan  to  an  issue  before  the  people  in  definite  form, 
and  that  you  provide  such  funds  as  may  be  necessary  for 
the  purpose  either  from  the  traction  fund  or  from  other 
sources. 


18 


Last  Commission  Turned  Out  Defeated  Ordinance 

In  this  connection  I  call  your  attention  to  the  fact  that 
numerous  commissions,  committees  and  individuals  have 
been  appointed  in  the  past  to  investigate,  study  and  report 
on  local  transportation  conditions  and  the  City  has  on 
hand  a  wealth  of  data  upon  which  thousands  of  dollars 
have  been  spent  to  no  avail.  The  last  commission  con¬ 
sisting  of  William  Barclay  Parsons  and  Robert  Ridgway 
of  New  York  and  Bion  J.  Arnold  of  Chicago  spent  $295,- 
467.17  upon  its  work  and  the  work  of  the  local  transporta¬ 
tion  committee  embodying  its  recommendations.  This  re¬ 
sulted  in  the  passage  of  the  ill-fated  ordinance  vetoed  by 
me,  passed  over  my  veto,  and  defeated  by  the  people  on 
referendum  vote  last  November.  This  was  a  trustee  or¬ 
dinance  with  trustees  selected  in  advance,  all  for  nine- 
vear  terms,  and  all  of  whom  were  connected  with  the 
present  traction  management  or  financial  institutions 
closely  related  to  the  traction  interests  and  not  one  of 
whom  could  be  said  to  represent  the  interest  of  the  car¬ 
riding  public. 

Past  Procedure  Differs  from  Proposed 

Past  proceedings  differ  radically  from  what  I  herein 
propose.  Previously  the  Council  named  the  commissions 
and  became  responsible  for  the  results  of  their  efforts. 
In  this  instance  I  anticipate  appointing  the  commission  and 
will  assume  the  responsibility  that  its  work  will  result 
to  the  advantage  of  the  people.  Previously,  valuations 
have  been  put  upon  the  Surface  Lines  which  included 
every  fictitious  and  inflated  value  known  to  tricky  and 
ingenious  manipulators.  In  this  case  I  propose  that  what¬ 
ever  properties  are  assimilated  shall  be  bought  or  built 
at  their  actual  cost.  Previously  the  ordinances  have  con¬ 
templated,  directly  or  indirectly,  increases  in  rates  of  car¬ 
fare.  Here  I  contend  that  the  people  shall  have  trans¬ 
portation  at  five-cent  fares  and  that  transfers  shall  be 
universal  for  travel  in  a  general  direction.  Previously  the 
lines  have  been  located  to  suit  the  traction  companies  and 
favor  special  interests.  Here  I  propose  that  the  lines  be 
located  solely  for  the  purpose  of  serving  the  public  and 


19 


of  being  maintained  and  operated  under  direct  respon¬ 
sibility  to  the  people  and  in  their  interests  alone. 

Ordinance  Submitted — End  Private  Ownership,  Give  Peo¬ 
ple  Ownership  and  Five-cent  Fare 

I  submit  herewith  a  form  of  ordinance  and  urge  im¬ 
mediate  consideration  thereof  to  the  end  that  action  may 
be  initiated  on  our  traction  problems  without  undue  de¬ 
lay.  Prompt  passage  of  this  ordinance  means  that  work 
on  preliminary  details  can  be  started  at  once  and  that  at  a 
comparatively  early  date  legislative,  financial  and  engin¬ 
eering  plans  may  be  reported  that  will  mean  a  lasting  end 
to  private  ownership  and  operation  of  local  transportation 
service,  which  has  at  all  times  been  the  servant  of  organ¬ 
ized  wealth  and  greed.  In  place  thereof  we  will  have 
transportation  under  a  representative  ownership  and  op¬ 
eration  directly  controlled  by  the  people  for  all  time  to 
come,  and  such  control  in  my  judgment  will  prove  effi¬ 
cient,  economical  and  responsive  to  public  opinion  which 
private  ownership  and  operation  never  has.  Instead  of 
trustees  selected  by  traction  magnates  and  related  finan¬ 
cial  interests  for  long  terms,  whose  concern  for  the  people 
is  measured  only  in  money  and  profits,  we  will  have 
trustees  elected  for  five-year  terms  by  the  people  whom 
the  transportation  serves  and  whose  whole  solicitude  will 
be  for  the  public  welfare. 

I  am  convinced  that  this  form  of  ownership  and  opera¬ 
tion  is  the  safest  and  best  policy  to  provide  proper  and 
adequate  transportation  at  a  five-cent  fare.  It  will  mean 
a  people’s  ownership  and  operation  in  which  the  people 
directly  affected,  and  who  pays  the  costs,  become  entitled 
to  full  voice,  under  a  well  ordered  system,  in  the  man¬ 
agement  and  direction  of  their  own  service. 

Respectfully  submitted, 


Mayor. 


20 


AN  ORDINANCE 

Authorizing  the  Appointment  of  a  Commission  on  Local 
Transportation  to  Investigate,  Study  and  Formulate 
Plans  for  the  Solution  of  Local  Transportation  Prob¬ 
lems. 

Whereas,  The  Mayor  of  the  City  of  Chicago,  on  September 
9,  1919,  sent  a  message  to  the  City  Council  of  said  City,  in  which 
he  outlined  a  plan  for  the  solution  of  the  local  transportation 
problems  confronting  the  people  of  the  City  of  Chicago  and 
surrounding  territory  by  the  creation  of  a  local  transportation 
district  administered  by  trustees  elected  by  the  peopie  thereof 
which  should  own,  control  and  operate  a  comprehensive  system 
of  street  railways  with  transportation  at  a  five-cent  fare;  and 

Whereas,  It  is  necessary,  in  order  to  bring  said  plan  before 
the  people  in  concrete  form,  to  secure  enabling  legislation  and 
to  work  out  the  legal,  engineering  and  financial  problems  con¬ 
nected  therewith,  and  such  details  can  only  be  arrived  at  through 
the  employment  of  engineers,  accountants,  attorneys  and  others 
who  have  expert  knowledge  on  the  subject  of  local  transporta¬ 
tion  ;  therefore 

Be  It  Ordained  by  the  City  Council  of  the  City  of  Chicago : 

Section  1.  That  the  Mayor  be  and  he  is  hereby  authorized 
and  empowered  to  make  and  execute  a  contract  or  contracts  for 
and  on  behalf  of  the  City  of  Chicago  with  persons  qualified  to 
perform  the  duties  herein  prescribed  for  them,  who  shall  form 
a  commission  for  the  investigation  and  study  of  local  transporta¬ 
tion  conditions  and  who  shall  formulate  plans  for  the  acquisition, 
extension,  control  and  operation  of  street  railways  serving  the 
public  in  the  City  of  Chicago  and  surrounding  territory.  The 
Mayor  shall  proceed  in  such  manner  and  use  such  means  as  he 
deems  proper  in  order  to  secure  for  this  purpose  engineers, 
attorneys  and  accountants  of  the  highest  standing  in  their  pro¬ 
fession  who  have  had  the  best  possible  experience  in  the  line  of 
transportation  work  tending  to  fit  them  for  solving  the  ques¬ 
tions  connected  with  the  local  transportation  situation  and  the 
presentation  of  plans  for  creating  a  local  transportation  district 
administered  by  trustees  elected  by  th,e  people.  Separate  con- 


21 


tracts  may  be  entered  into  with  the  persons  named  for  such 
commission,  the  periods  for  which  such  contracts  shall  run  may 
begin  at  different  times,  and  the  compensation  to  be  paid  to  such 
persons  forming  said  commission  may  vary  and  shall  be  deter¬ 
mined  by  the  Mayor. 

Section  2.  It  shall  be  the  duty  of  the  said  Commission  to 
make  a  complete  and  thorough  investigation  of  the  whole  subject 
of  local  transportation  and  the  problem  of  obtaining  improved 
transportation  facilities  for  the  City  of  Chicago  and  surround¬ 
ing  territory  by  means  of  street  railways,  and  to  formulate  plans 
for  the  creation  of  a  public  body  for  the  purpose  of  owning, 
controlling  and  operating  a  system  of  local  transportation  in  a 
district  which  shall  embrace  the  area  of  the  entire  City  of  Chi¬ 
cago,  and  such  other  portions  of  the  areas  of  adjoining  cities, 
villages  and  towns  as  logically  form  a  part  of  the  metropolitan 
district  of  Chicago.  Said  Commission  shall  also  cause  to  be 
drafted  such  legislative  bills  as  may  be  necessary  or  expedient, 
for  presentation  to  the  General  Assembly,  whereby  the  manner 
of  forming  such  district  and  the  delegation  of  powers  thereto 
are  fully  defined  and  set  forth,  such  proposed  legislation  to  pro¬ 
vide  for  the  formation  of  such  local  transportation  district 
through  a  referendum  vote  of  the  people  in  the  territory  affected. 

It  shall  further  be  the  duty  of  such  Commission  to  prepare 
a  series  of  plans  with  such  detail  as  may  be  necessary  by  which 
a  complete  system  of  street  railways,  including  all  necessary 
subways,  structures  and  appurtenances,  adequate  for  the  present 
and  future  needs  of  such  transportation  district,  may  be  provided 
either  bv  the  construction  of  new  lines  or  by  purchase,  con¬ 
demnation  or  otherwise. 

The  said  Commission  shall  complete  its  work  within  nine 
months  from  the  time  the  City  Council  shall  have  made  the  nec¬ 
essary  appropriation  therefor,  or  shall  otherwise  have  provided 
the  means  of  proceeding  with  said  work,  and  the  said  Commis¬ 
sion  shall  within  such  time  submit  to  the  Mayor  for  transmis¬ 
sion  to  the  City  Council  a  full  report  thereof,  together  with  the 
plans  worked  out  and  recommended  by  it,  the  proposed  enabling 
legislation,  and  all  other  matters  prepared  in  pursuance  of  the 
powers  and  duties  herein  prescribed. 

Said  Commission  shall  also  make  reports  to  the  Mayor  on 
any  phase  of  its  work  when  the  same  is  called  for  by  the  Mayor 


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and  at  such  other  times  as  the  Commission  may  deem  proper. 

Section  3.  To  the  end  that  a  comprehensive  plan  for  a 
complete  system  of  street  railways  as  provided  for  herein  may  be 
designed  and  presented  in  concrete  form  for  approval  and  rati¬ 
fication,  said  Commission  shall  have  power  to  employ  a  secretary 
and  such  attorneys,  engineers,  accountants,  clerks,  stenographers 
and  other  employes  as  may  be  needed,  to  rent  suitable  quarters 
and  to  incur  other  necessary  expenses  as  the  same  may  be 
required.  The  City  Council  shall  fix  the  salaries  of  all  employes. 
The  compensation  of  the  members  of  said  Commission  and  the 
appropriate  expenses  for  same  and  for  any  report  or  reports 
made  by  same,  including  the  printing  and  circulation  of  such 
reports,  shall  be  paid  out  of  appropriations  now  made  or  here¬ 
after  to  be  made  for  purposes  of  street  railway  construction  and 
drawn  from  the  deposits  made  by  the  traction  companies  under 
the  terms  of  their  respective  ordinances,  commonly  known  as 
the  traction  fund,  or  from  such  other  fund  or  funds  as  the  City 
Council  shall  deem  proper.  The  total  amount  to  be  expended 
for  all  purposes  named  herein  shall  not  exceed  the  sum  of 
$250,000. 

Section  4.  This  ordinance  shall  take  effect  and  be  in  force 
from  and  after  its  passage  and  due  publication. 


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